There is no single right way to pay for home improvements, but what matters is making the choice that suits your needs, budget, and long-term financial goals.
This is according to Nedbank executive for unsecured lending Wendy Beaumont, who highlighted that while South Africans are eager to upgrade their homes, many are unsure of how best to fund their renovations.
“For those needing financial support to get started, two common options are personal loans and home loan refinancing. But how do you know which route is suitable for your project, budget, and long-term financial strategy?
“To make informed, responsible decisions, it is imperative for homeowners to know the key differences, pros and cons, and ideal use cases of each financing method,” said Beaumont.
She said personal loans are unsecured, meaning you do not need to offer your home or
other assets as collateral.
She said they are often the faster option, with a simpler application process and fewer documents required.
Loan terms typically range from 12 to 72 months and feature fixed monthly repayments.
She explained that these loans are best suited for small- to medium-sized projects such as painting, kitchen upgrades, installing new floors, or purchasing appliances.
However, the interest rates are generally higher, especially for borrowers with average credit scores, and repayment periods are shorter, which means higher monthly instalments.
If you are planning a more ambitious renovation, such as adding an extra room or
making structural changes, she said, refinancing your home loan may be the better route.
The two available options include applying for a further loan against the increased
value of your property or a readvance, where you reborrow money you have already paid into your bond.
“However, a readvance can also be ideal for smaller projects when clients have been paying extra into their home loan account. This will enable faster access with competitive
interest rates.
“In contrast, the processing times are longer, as credit assessments and approvals can slow the process. Upfront fees are typically higher than for a personal loan, and you may increase your total debt exposure and likely your repayment term,” said Beaumont.
She emphasised that it is important for homeowners to compare interest rates, fees and repayment terms before choosing.
She insisted that speaking to a financial advisor or your bank can also help ensure the decision supports both your renovation goals and financial future.
“Personal loans offer quick access to funds and a simpler application process, while
refinancing your home taps into long-term value at lower rates.
“The key is to weigh short-term convenience against long-term cost and equity,” said Beaumont.
